Central NSW Market Update – 25/01/2018

Another week of hot and dry weather seems to have spurned on further questions regarding the current season’s sorghum crop potential. There is a wide variance in industry speculation on how big the crop will be, and with good reason, as rainfall over the next three weeks will significantly influence yields going forward. In the last two weeks we have seen sorghum values rise sharply in response to the dry heat, and with the spread to wheat and barley stocks narrowing, feeders will be less inclined to opportunistically switch to using the summer crop in their rations.

Coarse grains have firmed slightly this week both in the track and delivered markets, though it is noted barley and sorghum have seen bigger moves than wheat over the last four weeks. It’s no secret barley is in tight supply this year and it continues to be priced at a premium to wheat in certain instances. The East Coast feed wheat balance on the other hand is not as tight, with higher levels of production in Victoria and old crop carry-out helping the cause on this front.

The higher percentage of protein wheat produced this season adds an interesting dynamic to the market, as there are fewer cheaper feed wheat grains around, especially in traditional Darling Downs draw zones. APH2 is already pricing at the same values as feed wheat in Southern Queensland and some parts of Northern NSW. We expect this trend to continue as supplies start to dwindle, adjusting accordingly to the movements of freight spreads from other areas of the East Coast in the coming months.

Chick pea values continued to firm this week, though they did fall away somewhat in the lead up to Australia day. It was reported some additional business was done into Pakistan, which created the recent increase in prices. Values started the year around the mid-$500/MT level delivered Central NSW packer, and peaked around the mid-$600/MT levels mid-week, before settling in the low $600/MT range. The longevity of this recent rally, and where values go to from here, will ultimately be determined by how the Indian crop performs. We should start getting some feedback in the next month or so on what the case is, as subcontinent pulses are harvested traditionally during February and March.